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A growth in life-long renters has led to a surge in demand for private rental housing, just at the time many buy to let investors are contemplating leaving the sector.
A number of regulatory and financial changes has led to many landlords deciding that the pressure of the buy to let sector is too much. There were 19.45 per cent fewer buy to let mortgages taken out in June in comparison to the same month the previous year. There was also an 11.1 per cent drop in value to £0.8 billion. However, more people are choosing to remain in the buy to let sector as life-long renters, leading to an imbalance in supply and demand.
Managing director of DJ Alexander Ltd, David Alexander, explained: ‘The BTL market has become much tougher in recent years with changes to affordability, access to finance, and a reduction in the tax benefits of property investment. All of this has led to a softening of the market and the option for many landlords of either leaving or contemplating leaving the marketplace. The result is potentially a fall in the number of private rental properties available although this will be different across the UK with some rental markets stronger than others. Therefore, many life-long renters, of whom there are a growing number in their thirties and forties, may find their choice limited by a smaller marketplace.’
In the long term, the buy to let sector has been growing, with private renter figures increasing from 11.4 per cent to 28.5 per cent over the last 11 years. Over the same period, the number of owner occupiers in the 35-44 age group has declined rapidly from 71.6 per cent to 52.4 per cent.
David continued: ‘With a growing number of life-long renters emerging there is going to be an increasing need for more social housing, more private renting, and more affordable homes across the country. The government and local authorities need to work together with the private sector to ensure that we have a sufficient housing stock to serve the changing needs of the UK population. This means the freeing up of more land in areas where demand is high for property development, a steady and continuing programme of social house building, the encouragement of the private sector to build more homes in areas of greatest need, and the encouragement of a strong and vibrant private rented sector.’